Balancer was a pioneer in the DeFi space, and is a key building block of the infrastructure. This protocol allows efficient trading by pooling crowdsourced liquidity and identifying the best price.

Data shows the platform’s growth in terms of total value over the past year.

Before the most recent market-wide slump, which took place in May, Balancer had peaked at over $360 billion in TVL, a 450% increase in just 5 months, since January 2021.

This was also due to a massively increased user participation within the broader DeFi market , where many protocols saw a surge of their user base and other metrics.

Balancer: ‘The Most Customizable AMM’

Another thing that we were curious about is the reason for which Balancer lags behind other protocols such as Uniswap in terms of TVL.

Musighi explained to us that there are many factors that affect a product’s market fit and traction for DeFi protocols.

“One thing that’s clear about Balancer is that it has some of the best tech in the space and it’s also the most flexible and customizable Automated Market Maker (AMM) that there is. Balancer is DeFi-primitive in that it’s so flexible that it can be used in so many ways that it’s almost like a general purpose technology.”

But there’s a side to this – marketing. Although the protocol was founded in a short time ago, it has been managed almost entirely by “brilliant technical talent” but Balancer didn’t have many marketing people. “In fact, for a long period, we didn’t have any .”

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This is where the project still has room for growth and where the team is focusing their attention right now. Musighi says that this is one of the key factors to helping Balancer grow.

But there’s more: Musighi stated that Balancer Labs as well as the community had learned a lot by Balancer V1 being “in the wild growing as much as .”

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According to him, this has resulted in the successful release V2, which makes major improvements in areas like gas efficiency and UX. It also includes features that solve key market needs and stands out as an ideal solution.

He also mentioned that the transition from Balancer V1 into V2 was being done slowly and will take 6-8 weeks.

Binance Smart Chain (BSC) or Ethereum

Many decentralized AMMs, such as Balancer, and their greatest rivals Uniswap or Sushiswap, are heavily dependent on the blockchain on which they were built.

Ethereum was the most popular, but it was experiencing network congestion. This caused fees to skyrocket, and transactions to slow down. Ethereum 2.0 is a proposed solution currently in development. This will allow for the possible transition from a PoW-based consensus algorithm into a PoS one.

“I’m very optimistic about it – it’s really important. We are confident that Ethereum 2.0 will succeed. In the meantime, we always want to cater to the best interests of our users right now, not only in the future.”

Musighi stated that there are many scaling options, including layer two solutions, Ethereum sidechains and other layer ones, as well as adopting cross-chain compatible strategies. It’s also worth noting that Balancer has also launched on Polygon (a layer two solution) in aims of reducing the high gas fees.

“Those are the things that we’re thinking deeply about right now and very thoughtfully because we want to understand where we feel the future might go and how we can cater to the needs of the market in the best way possible.”

Elsewhere, we also discussed one of the hottest trends of 2021 – Binance Smart Chain (BSC). Musighi does not see it as an alternative to Ethereum. Rather, he believes that it has helped reduce Ethereum’s congestion by offloading transaction volume from the main blockchain .”

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He stated that the future and long-term would favor “the most transparent and decentralized solutions.” This is why other centralized blockchains cannot compete with the larger picture.

“If they did, they would see a massive migration of users, projects, liquidity, and volume off of Ethereum that hasn’t been happening. And that should tell you that even with its flaws and even with the areas that it needs to grow, it’s still offering so much value.”

A Crunch for Talent in DeFi

Jeremy believes DeFi is the future in finance.

“I think there’s less and less doubt about that idea in society in general today, which is of course, one of the reasons why we’ve been seeing these big bull runs.”

When asked about his biggest challenge, he stated that “bringing in different diversifications of talent into industry, making DeFi products better holistically accessible and more holistically sound .”

“I think one of the challenges that DeFi faces today is that there’s a crunch for talent because there are not enough people out there who are deeply familiar with crypto, but also have non-technical skills or even technical skills, all skills, from engineering to design, to marketing and branding and so on.”

He also spoke about the competition between DeFi (central finance) and CeFi (“centralized finance”), admitting that CeFi has “a lot of customers – they own those customer relations.” Another aspect is the front-end touch-point with digital financial service users.

This presents a tremendous opportunity for DeFi protocol, which can seamlessly integrate in the back-end because they clearly have technical advantages, but “the disadvantages of user experience design and user acquisition and mass market acceptance .”